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The Effect of Labor Market Conditions at Entry on Workers' Long-Term Skills

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  • Jaime Arellano-Bover

Abstract

Using data on adults' cognitive skills from nineteen countries, this paper shows that labor market conditions during the education-to-work transition affected workers' long-term skill development. Workers who faced higher unemployment rates at ages 18 to 25 have lower skills at ages 36 to 59. Unemployment rates at ages 26 to 35 do not have such an effect. Skill inequality is affected: those with less educated parents experience most of the negative effects. Using German panel data on skills, I document a mechanism related to heterogeneous skill development across firms: young workers at large firms experience higher skill growth than those at small firms.

Suggested Citation

  • Jaime Arellano-Bover, 2022. "The Effect of Labor Market Conditions at Entry on Workers' Long-Term Skills," The Review of Economics and Statistics, MIT Press, vol. 104(5), pages 1028-1045, December.
    • Handle: RePEc:tpr:restat:v:104:y:2022:i:5:p:1028-1045
    DOI: 10.1162/rest_a_01008
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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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